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McDonald's CEO: 'We're behaving like a leadership brand'

by Simon Gwynn
July 26, 2017

The restaurant chain has only "scratched the surface" of the potential for delivery, Steve Easterbrook said, following the brand's strong financial results.

McDonald's revenues for the first six months of 2017 fell 4 percent to $11.7 billion as it continues its refranchising process in the U.S., but lower costs meant that operating income was up 19 percent to $4.3 billion.

Comparable sales in the second quarter, which take out the impact of factors such as new restaurant openings, were up 6.6 percent globally. In the international lead segment of the business, which covers the largest non-U.S. markets, including the U.K., comparable sales were up 6.6 percent.

The consistent performance of the business was such that it grew both sales and guest count in each of its nine largest markets for the first time since 2008, Easterbrook said in an investor call.

This April, McDonald’s achieved its highest monthly U.K. sales in its 43-year history in this country, he added.

Easterbrook made no attempt to hide his confidence in the brand and its prospects, saying: "We’re fit for purpose with the right structure, right talent and right mindset. We’re behaving like a leadership brand."

Burger on the sofa in your onesie?

Easterbrook used the call to outline what he called the three key accelerators for McDonald’s: digital, delivery, and the roll-out of the "Experience of the Future" restaurant format in the U.S.

"These new platforms for growth build on our foundation and enhance or accelerate everything we’re doing for our customer," he said. "They bring the most benefit to the most people in the shortest amount of time."

The digital strategy is built on mobile order and pay, which is expected to be available in 20,000 restaurants by the end of 2017, including 14,000 in the U.S.

The service "illustrates our ambition to redefine convenience for our customers", Easterbrook said. "It also shows how McDonald’s can leverage our size and scale, as nearly 75 percent of the population in our top markets lives within three miles of a McDonald’s."

Delivery was proving to be a spend driver, he added, with the average value of an order typically one-and-a-half to two times higher than in a restaurant.

But, unlike moves such as introducing all-day breakfast in U.S. restaurants, which provided an immediate boost, Easterbrook said, the impact of both mobile order and pay and delivery would be felt more gradually: "It will take time to build awareness, which is the initial step forward to changing customer behaviour."

The brand is today holding a "Global McDelivery Day", in which anyone placing an order for delivery will have the chance to win McDonald’s merchandise including pillow cases, picnic blankets and onesies.